Advance TerraFund

BSE 6A6 Bloomberg 6A6: BU

• Agricultural Land - Advance Terrafund REIT is the largest landlord in Bulgaria right after the government. The main focus of the company is seeking strong capital appreciation by quick consolidation of the acquired plots. At the same time the Fund is aiming at providing its shareholders with current yield coming from rent and/or sale. Advance Terrafund will not be the farmer but only the landowner. To secure the current yield, the company has established long-term relationship with the leading farming companies in Bulgaria.
• Urban Land - the Fund invests also in land located within the borders or in the vicinity of the largest cities in Bulgaria targeting further amendment of the land statute. The parcels that are of interest for the company have the appropriate size, location and infrastructure that is most suitable for development of commercial, industrial and/or logistic centers.

Investment Goals

1. Advance Terrafund REIT plans to acquire 34 500 ha in the most suitable agriculture areas in the country till the end of 2010.
2. The company rented out 79% of the acquired agricultural land for 2009-2010 Agricultural Year and forecasts to rent out 85% in 2010-2011.
3. To sell the acquired land at the most profitable way.
4. Advance Terrafund REIT do not intend to undertake building development, repairs and real estate improvements.
   

Investment Strategy

1. Setting up a land portfolio, where 90% are invested in agricultural and up to 10% in urban land.
2. Establishment of a strong network of agents buying agricultural land exclusively for the Fund.
3. Acquiring farmland in regions with the best soil and climate conditions.
4. Acquiring urban land suitable for industrial and/or commercial real estate development.
5. Quick land consolidation aiming at high capital appreciation.
6. Establishment of long-term relationship with the leading farming companies.
7. Renting out the agricultural land in the Fund’s portfolio.
8. Development of the best equity/debt structure to fulfill the Fund’s investment target and to increase the Fund’s share value.
9. Sell consolidated agricultural and urban land to international and domestic farmers and/or investors.

Competitive Advantages of REITs

1. Public companies – REITs are registered and licensed under the requirements of the Special Investment Purpose Vehicles Act. The Financial Supervision Commission of Bulgaria controls their activities. The REITs are required to have their shares listed on the Bulgarian Stock Exchange – Sofia, which provides for transparency and liquidity.
2. Current yield for the shareholders – at least 90% of the Fund’s net profit should be distributed as dividend.
3. Tax breaks:
   • REITs are exempt from corporate tax.
   • No capital gains tax for trading with shares of REITs.
   • Dividend tax is 5%, which is 5% lower than the corporate tax for legal entities (i.e. 10%).
4. Liquidity – the shares of REITs are among the most liquid on the Bulgarian Stock Exchange – Sofia.
5. Unique – REITs provide the opportunity to everybody to invest small amount of money in a diversified real estate portfolio.